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They are claiming the banks are fixing prices without offering any proof. Well, the "proof" being "we all know banks are greedy and evil, so they must be doing
by acchow 9y ago
They are claiming the banks are fixing prices without offering any proof.
Well, the "proof" being "we all know banks are greedy and evil, so they must be doing this"
- hobs 9y agoI make no claim they are or not, simply that making a claim about banks doing something isnt anti-intellectualism, unless you believe making an unverified claim (in your eyes) is anti-intellectual. Wikipedia states "Anti-intellectualism is a hostility to and mistrust of intellect, intellectuals, and intellectualism commonly expressed as deprecation of education and philosophy or dismissal of art, literature, and science as impractical and even contemptible human pursuits.[1]" None of that is happening in the grandparent (as far as I can tell.) You can certainly accuse them of biased unverified information and demand proof, its just not anti-intellectualism.
- davidw 9y agoThey are quite literally setting the prices of IPO's though, by fiat, and not via an auction or some other market-oriented mechanism. I have no opinion about actual 'collusion' but the mechanism looks pretty bad seen from afar.
- acchow 9y agoThe banks compete against each other on price - the company gets to freely choose the underwriter and they take price into account. Do you have evidence the banks are colluding on price? Edit: to clarify, no the banks do not really set the IPO price. The banks offer different underwriting prices. The company ultimately chooses the price among the many banks' offers.
- davidw 9y ago> Do you have evidence the banks are colluding on price? Nope, which is why I wrote that I have no opinion on that. Edit: I think that very direct collusion would probably not be a stable arrangement, long term. But perhaps 'not competing too hard' between a low number of competitors with big barriers to entry is realistic. > Edit: to clarify, no the banks do not really set the IPO price. The banks offer different underwriting prices. The company ultimately chooses the price among the many banks' offers. That's still a way less transparent and market-oriented option than auctioning the shares. It's a hell of a lot easier for a few banks to be 'gentlemanly' in their competition than it is for lots of people trying to get some shares at an IPO via an auction. I mean, we're discussing an IPO that was "oversubscribed" at the set price, meaning money was being left on the table, right?
- chimeracoder 9y ago> They are quite literally setting the prices of IPO's though, by fiat, and not via an auction or some other market-oriented mechanism. Er, no, it's literally set by an auction (the auction occurring between the different banks who can underwrite the IPO). A bank that is consistently able to predict the IPO opening-bell price better than the others, or is willing to accept a slightly smaller cut than the others, will win the auction, and will outperform the others on average.
- kgwgk 9y ago> the auction occurring between the different banks who can underwrite the IPO What do you mean? Do you have a reference?
- sah2ed 9y agoI wouldn't characterize the activities between banks underwriting an IPO as an auction, probably closer to a negotiation [0]. This [1] is a well-written prose from Matt Levine on the role of underwriters in working with Snap prior to their IPO. [0] https://www.bloomberg.com/view/articles/2016-01-15/uber-is-raising-more-money-from-rich-people https://www.bloomberg.com/view/articles/2016-01-15/uber-is-r... [1] https://www.bloomberg.com/view/articles/2017-03-27/banks-that-sold-snap-ipo-say-it-s-a-buy https://www.bloomberg.com/view/articles/2017-03-27/banks-tha...